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5 Dividend Paying Stocks Experiencing Growth

Dividend yields will often fall in low interest rate environments (usually due to a slow economy) and bull markets (stock returns tend to outpace dividends.) When you combine those two factors over the last 18 months the average dividend yield available in the S&P 500 has only been lower during the stock bubble of 2000-2001. This is not a great sign for stocks over the long term but it does mean that there are a few firms who are really standing out in contrast. We should expect to see dividend yields remain low while the Fed keeps interest rates near zero.

We have listed the criteria we used to develop the search for these stocks below. You can also run the search yourself at finviz.com. Try to modify the criteria yourself to meet your specific investing style.

Here are the criteria and the stocks returned by the screener:

  • Dividend Yield
  • Optionable and Shortable
  • ROE
  • Performance

Omega Healthcare Investors (OHI: 23.15, 0.29)
Dividend Yield: 6.47%
ROE: 8.46%
Performance (YTD): 23.30%
Dividend Growth Rate 5yr Avg: 9.73%
Dividend Payout Ratio: 162.00%
Consecutive Div. Increases: 6 years
Dividends paid since: 1992

Consolidated Communications Holdings (CNSL: 18.77, 0.06)
Dividend Yield: 8.28%
ROE: 42.19%
Performance (YTD): 16.43%
Dividend Growth Rate 5yr Avg: 55.79%
Dividend Payout Ratio: 161.00%
Consecutive Div. Increases: 0 years
Dividends paid since: 2005

Alliance Holdings GP (AHGP: 44.24, -0.12)
Dividend Yield: 4.36%
ROE: 49.02%
Performance (YTD): 69.12%
Dividend Growth Rate 3yr Avg: 23.78%
Dividend Payout Ratio: 83.00%
Consecutive Div. Increases: 3 years
Dividends paid since: 2006
This stock looks like a good candidate for further review. It has a decent payout ratio (considering the sector in which the stock belongs to), good dividend yield and promising dividend growth (the stock hasn’t paid/increased the dividend long enough to review 5yr growth).

Tanger Factory Outlet Centers (SKT: 44.24, 0.09)
Dividend Yield: 3.27%
ROE: 5.06%
Performance (YTD): 25.16%
Dividend Growth Rate 5yr Avg: 3.95%
Dividend Payout Ratio: 375.00%
Consecutive Div. Increases: 16 years
Dividends paid since: 1993
The payout ratio of this stock is too high and so dividend is unsustainable. Expect dividend cut.

Frontier Communications Corporation (FTR: 8.76, 0.23)
Dividend Yield: 8.78%
ROE: 37.76%
Performance (YTD): 19.44%
Dividend Growth Rate 5yr Avg: -1.25%
Dividend Payout Ratio: 214.00%
Consecutive Div. Increases: 0 years
Dividends paid since: 2004
Frontier recently cut its dividends. The company has done a good job under CEO Mary Wilderotter of milking profit from a declining fixed-line telecom business. The company recently ratcheted back its payout as it beefs up operations recently purchased from Verizon. However, I cannot consider this stock as a secure dividend stock.

Emphasis added by the owner of this blog.
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